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Friday, April 20, 2007

"The county has seen a 579% increase in foreclosures since 1998, with 715 homes lost that year, and 4,855 foreclosed upon in 2006."

I can't express the kind of frustration I am feeling right now - there's nothing like buying a starter house that is too small at the top of the market and then having to wait ten years to be able to sell it for something bigger. Is this the worst thing that has ever happened to a person? Hardly. Does it still suck for everyone in Michigan that our economy is busted, our legislature is unwilling or unable to cooperate, and the value of our greatest asset is depreciating or even under water? You bet.

Older people: If you own a tudor or a brick duplex in Birmingham and you are ready to trade down for something small and manageable with a first floor master, get in touch, we'll just swap houses.

12 comments
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My husband & I were just talking about this very thing the other day. About how thankful we are that we didn't bite the bullet and buy a house when we were living in MI. The market was still partially favorable then (2001-2003) but man, I'd hate to be stuck there now...While Colorado isn't suffering yet, the market is still booming, we are now faced with the reality that it's going to take more cash flow to get even a small paired home. We're talking $250,000+ for a 1300 sq ft duplex, essentially. Pure madness, if you ask me! I think I need to move to the deep south...a friend brought a 3200 sq ft, 4 bedroom/3 1/2 bath house on 3/4 acre bulit in 2004 for $209,000 near some air force base! I guess, no matter what, it's never going to be a perfect situation.

Oh dude, I so feel for you guys. We bought a house in 1996 and had to sell it when Scott's job took him 4 hours west...and we had to take $8K to closing to get out of the lien! It was disasterous and almost soured me to the whole house buying experience.

Yet, here we are again, bought this house 3.5 years ago when we moved and I'm loving every moment of it. To me, it is worth every penny...but who knows in a few years when/if we decide to move? You just never know.

Craigs List is a good idea. We have our condo up there:http://detroit.craigslist.org/rfs/310153465.html

We are desperate like you guys. We actually "sold" our condo last year with a lease purchase w/o option. Well, it turned out that there was an option. the girl rented from us while we lived at my parents house for 5 months (she was to purchase by the end of the 6 months) Then we get a letter from her lawyer, informing us that she was unable to obtain a mortgage. So we had to kick her out and move back! we are now still living there and desperatly trying to sell with a baby on the way in 5 months!

I guess that was kinda a vent, sorry. I just can relate, and wanted to let you know.

I'm very sorry that you are unhappy in your house. I think it's quite lovely, though I wish there were more wee ones for Noah to play with!

But this is definitely a buyer's market. I am looking forward to deciding what I'm going to do when I get home. I kind of want to renew my lease in Royal Oak for the next year so I might actually be able to enjoy a summer there and post-pone my decision during another year of bachelorhood.

But I also wouldn't mind setting down some serious roots and actually become landed gentry.

But nothing is permanent Jon. The market will bounce back. I've seen it first-hand. If Detroit's market can bounce back from the "flight" of '68, then metro Detroit will bounce back from this.

For your sake, I hope it's soon. For mine, I hope it waits until right after I make my first pruchase. If it bounces back too soon, I may have to move into your basement as I will NEVER be able to afford a home!

I don't want to imply that we're desparately unhappy with the house. It's very solid, geat yard, great location, well maintained. You can't beat the neighborhood or the schools. I just thought that we would be on to bigger and better now or soon, and the shitty market is keeping us from getting from our 'starter' house to the place we would really like to live.

Combine this with the fact that a house is a major investment that is now underperforming, and that creates stress. Lately when I pay the mortgage or the taxes (or even the plumber), I just think, "well, there's more cash I'll never get back." I know the market is going to go back up, but I don't want to be in this place for another 8 years while we're waiting.

Let's try to look on the bright side of this one (and there are a few bright sides). You have to live somewhere, so would you have been better off renting this whole time? Your property taxes and interest are deductible items on your income tax and rent is not.

When you move up, that seller is probably taking a bigger proportional hit than you are. So you are buying up at the bottom of the market, which is, of course, a good thing.

Yes, its frustrating to have a large investment under perform. I certainly feel your pain. But when you pay the plumber, remember, that even now, good houses in good condition are selling, so protecting your investment and having it in great shape when the time comes will pay off.

I did the math, and we would have been better off renting. If we sold our house this summer, it would probably be at a real loss to my principal in the mid 5-digits. Even if I did buy a house where the seller was taking a proportional hit, I would not have as much real principle to put down, making my new mortgage much larger, and I would have to pay mortgage insurance because I would no longer have a 20% down payment.

Under this scenario if we sold the house in this market, the loss of principle would be 50%. Now, had I purchased the house in 2000 instead of 2004 would I make money? Maybe. But that's not my reality or any of the thousands of people who bought home at the same time I did.

Would I have spent more on rent over the last three years than I would lose in principle? Yes.

Would I have spent more on rent over the last three years than I would lose in principle, plus taxes, insurance and maintenance? No. Once you figure in that my payments over the last three years have been overwhelmingly interest instead of principle since it is so early in my mortgage, it IS basically rent, so even with the interest tax deduction this is a loser. The only people who are benefitting in this market are the ones who bought their houses 30 years ago for $20,000 and are now worth $1,000,000 on paper. Even if they sell for $650,000, they can leave and go to Florida. Everyone else has a real problem.

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Hiya! We're Lauren and Jon. Welcome to our little home on the web! I have gray hair. A lot of them. Sometimes I write about it, and other times , we just chat about life. A warm WELCOME to our neck of the woods! HowBourgeois@gmail.com